BUWOG follows recent bond deal with senior debt restructuring

Residential Property Germany

The company, with 51,900 residential units in Germany and Austria, restructured the financing for 18,000 of its units with 1.1m sqm of lettable space mostly in the states of Schleswig Holstein, Lower Saxony and Berlin.

BUWOG Group, the listed German-Austrian full-service residential property investor, recently signed a loan agreement with Berlin Hyp and Helaba for €550m to refinance senior debt with a new loan period of eight years.

The company, with 51,900 residential units in Germany and Austria, restructured the financing for 18,000 of its units with 1.1m sqm of lettable space mostly in the states of Schleswig Holstein, Lower Saxony and Berlin. Closing is expected to be finalised in January 2017. Berlin Hyp and Helaba were also the original lenders on the 18,000 units.

In essence, the rstructuring enables BUWOG to optimise its loan costs by reducing the property LTV by deploying up to €40m from its recent €300m convertible bond issue (reported in these pages), as well as by changing the borrower structure and improving the orporate and management rating.

The effect will be that BUWOG improves its financial result by at least €4m per annum with a direct impact on its recuring FFO. For this year (2016/17) this should boost FFO by about €0.8m. BUWOG will also benefit by reducing amortisation payments of €13.4m on average per annum, resulting in an annual cash flow increase of about €17m.

The refinancing brings BUWOG's current average financing costs including the convertible bond from 1.90% to 1.76% with an average maturity term of 12.6 years.